Some truth about Comcast - WikiLeaks style

Steve Schultze sjs at Princeton.EDU
Fri Dec 17 02:51:21 CST 2010

George Bonser wrote:
> What would any provider think if a city said "sure, you can have access 
> to our residents' eyeballs.  It will cost you $5 per subscriber per month".  
> Would Comcast or anyone go for that?

Dave Temkin wrote:
> These are exactly what Franchise Agreements are for.  Yes, cities charge
> MSOs and LECs for access all the time.

I've been lurking on this thread for awhile, but I feel a need to weigh
in here.  There are some critical distinctions between a city imposing
conditions on access to its property and a telecommunications company
imposing conditions on access to its network.  There are also some
important limitations to the cases in which cities can indeed impose any
access restrictions, which prompt the question of why parallel policy
limitations do not necessarily apply to last-mile companies.

First, the justification for cities requiring things of companies in
order to gain access to the local market are grounded in practical and
policy considerations.  On a very concrete level, putting wires in the
ground requires permission from the city for rights-of-way (and such
activities have genuine costs for the city).  This permission comes in
the form of the "Franchise Agreements" that Dave refers to.  From a
policy perspective, the city has an interest in ensuring that it gets
the greatest value for its citizens out of the valuable last-mile
concessions it grants to private parties.  Historically, this meant that
last-mile rights-of-way were a hook for enforcing customer service
requirements, disciplining pricing, ensuring universal service, and
supporting diversity of programming and "public access."  Negotiating
these terms with each municipality was the price that companies had to
pay for monopoly access to local markets.  What I think George's comment
does not completely appreciate is that (ideally) cities are imposing
such requirements at the behest of and for the benefit of the (local)
public, whereas private constraints on local access are (by design)
motivated by profit.

Now, all of these requirements apply to providers of cable video content
under the terms of the Cable Act of 1984 (which created a new Title in
the Communications Act).  None of them applied to LECs, which
traditionally had a blanket permission to build out for their
telecommunications services.  The exception is for LECs that have started
to offer video services.  In that case, the same requirements kick in
(for the video portion of those services).  The exception to THAT is for
states in which the LECs have successfully lobbied the state government
to give them a blanket license to deploy video services statewide
without negotiating locally (Michigan, for example, as opposed to
Massachusetts).  Whether or not you think such statewide agreements are
a good thing tends to be a funciton of who you represent.  In any event,
the FCC has also further weakened localities' ability to impose
requirements on even the video portion of these services (22 FCC Rcd.
5101 and 22 FCC Rcd. 19633).  

Importantly, for the NANOG crowd, none of these local controls applies to
the broadband portion of such services.  This all goes back to our
artificially siloed Communications Act and some decisions made by the
FCC almost a decade ago.  The 2002 Cable Modem Order said that
localities had no power to exercise authority over the broadband portion
of such services.  That means that they cannot demand payment for access
to rights-of-way for broadband services, but it also means that they cannot 
impose public interest requirements on the provision of that service... for 
example that such service be provided universally to all citizens or that 
access to different types of content be provided on a non-discriminatory basis.
The reasoning was that these services were not the video services
envisioned in the Cable Act of 1984, but rather broadband services that
the FCC was newly classifying as "deregulated."  The 2002 Cable Modem
Order was in fact the event that precipitated the 2005 "Brand X" Supreme
Court decision that cemented the FCC's authority to reclassify last-mile
broadband services not as common carriers but rather in a vaguely
deregulated service.  This helped lead to our modern debate about net

These jurisdictional turf wars are also at the heart of fights to allow
cities to create municipally owned broadband networks that may then be
leased on equal terms to all comers.  It is also the reason that cities
do not have the legal authority to compel "open access" or
"non-discrimination" requirements on private networks within their
boundaries.  Broadband providers have understandably sought to gain
near-exclusive control over their customers, and the legal framework
helps them to avoid municipal networks and other requirements.  Whether
or not you believe that the local franchising regime that emerged in the
1980s makes sense for internet access today (not that it applies to broadband
anyway), you must at least admit a fundamentally different incentive
model compared to that of private companies.  Whereas localities must
now provide equal access to all companies that wish to do a physical
buildout, those companies do not have any locally imposed requirement to
provide equal access of use of their networks.


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